Outcome Hedging
It is not just the costs of litigation that can be managed through TPF. In some circumstances, it is possible to develop hedging strategies for litigants (both Claimants and Defendants) whose principal objective is simply to reduce the overall uncertainty of the outcome.
Claimants, in managing the contingent asset represented by their litigation, necessarily face the risk of an award of damages being made in their favour that is substantially lower than expected or of material delay to the receipt of payment of the award.
Defendants, in managing the contingent liability represented by the litigation against them, necessarily face the risk of a higher than expected damages award being made against them.
In both cases the eventual outcome of the litigation may be highly uncertain and a source of serious financial or other business risk. Quantum or Outcome Hedges are transactions that mitigate this risk by bringing in third parties to share the risks and the outcome.